The Los Angeles City Council approved a plan Tuesday for two residential high-rises next to the Hollywood Palladium, setting the stage for a protracted legal battle with the politically active nonprofit group next door.

On a 12-0 vote, the council backed a zoning change, a height district change and other approvals for the Palladium Residences, two towers expected to rise as tall as 30 stories on Sunset Boulevard near a Metro Red Line subway stop.

Representatives of Crescent Heights, the project's developer, said the council's actions will ensure the preservation of the Hollywood Palladium, the Streamline Moderne concert venue that opened in 1940. The planned complex will "positively change the landscape of Hollywood, by putting housing on top of surface parking lots, which is exactly where it belongs," said Palladium lobbyist Steve Afriat.

Backers of the $324-million project have argued for months that it would provide much-needed homes in the middle of a regional housing crunch. But opponents with the AIDS Healthcare Foundation, which occupies the 21st floor of the office tower next door, say the complex is too tall and too dense for its location.

"We intend to exhaust every legal avenue, including filing suit, to stop the Palladium towers," said foundation President Michael Weinstein, who called on Mayor Eric Garcetti to veto the council's decision.

The foundation's executives have made the Palladium project part of a larger fight over growth and development citywide. Working with its allies in the Coalition to Preserve L.A., the AIDS nonprofit has been gathering signatures for a ballot measure to prohibit approval of "mega-developments" like the Palladium. The measure is being targeted for the March 2017 municipal election.

Hollywood's major boulevards already have structures that are similar in size to the Palladium project, said Edward Campbell, a lawyer with the firm Nixon Peabody, who has real estate clients that do business at City Hall. What sets the Palladium project apart, he said, is that it will have homes, not offices.

"I don't feel like it's particularly out of sync with the neighborhood," he said.

The foundation and its allies say the Palladium Residences would do little to address the need for affordable housing in L.A. But Leron Gubler, president and chief executive of the Hollywood Chamber of Commerce, contends that adding hundreds of apartment units would make a difference to the region.

"Los Angeles has one of the worst housing shortfalls in the nation," Gubler said last week. "This is the type of project that we need to close that gap."

Councilman Mitch O'Farrell, who represents part of Hollywood, said in a statement that 37 of the project's apartments would be set aside for people at the lower end of the economic spectrum. Rents in those units are expected to range from $400 to $1,000 per month, depending on the size.

The AIDS Healthcare Foundation brought dozens of supporters to the hearing, many of them wearing red T-shirts with the message "Speak Out." However, city lawmakers did not allow public testimony on the project, saying a lengthy hearing had already been conducted this month.

Backers of the Palladium Residences have sounded increasingly unhappy with the opposition from the AIDS Healthcare Foundation, which has assembled a legal team to challenge the project. The nonprofit has retained the law firm of Robert P. Silverstein, which successfully overturned the city's approval of a Target shopping center and the 23-story Sunset and Gordon apartment tower, both in Hollywood.

Afriat, the lobbyist, said after Tuesday's vote that Weinstein is using the nonprofit as "his personal piggy bank" in the Palladium fight.

"It's outrageous that they're spending AIDS Healthcare Foundation money, money that was given to them to provide support services to people with AIDS, so that the executive director of the AIDS Healthcare Foundation can preserve his views," Afriat said.

Weinstein said the Palladium fight is not financed by grants or donations to his nonprofit. The group, he said, runs various businesses that make money on their own, including a pharmacy. "We're at liberty to spend that money any way that we wish," Weinstein added.

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"I have a right as the chief executive of a very, very large organization that's headquartered here, as much as any private corporation, to take a position on civic issues," he said.